The German economy is on a tear — shrugs off Brexit like it never happened

German
Chancellor Angela Merkel wears safety goggles while watching an
experiment in the DLR_School_Lab Koln during a visit of the
European Astronauts Center of the European Space
Agency.Volker Hartmann/Getty
Images

The figures from the country show that GDP grew by 0.4% in the
second quarter of 2016, double the 0.2% that had been widely
forecast by economists. The figures mark a slowdown from the
first quarter of the year, when the economy grew by an impressive
0.7%.

Year-on-year growth coming out of Germany was also more
impressive than expected, with price adjusted growth measuring at
3.1%, the fastest expansion in five years, according to Destatis.
Adjusted GDP figures showed yearly expansion of 1.8%, compared to
the 1.9% growth seen in Q1.

"The quarter-on-quarter comparison (upon adjustment for price,
seasonal and calendar variations) shows that positive
contributions came especially from the balance of exports and
imports. According to provisional results, exports were
up, while imports were slightly down compared with the first
quarter of 2016. Both household final consumption expenditure and
government final consumption expenditure supported growth, too.
However, growth was slowed by weak gross capital formation. After
a strong first quarter, a decline was recorded especially in
gross fixed capital formation in machinery and equipment and in
construction."

"The economic performance in the second quarter of 2016 was
achieved by 43.5 million persons in employment in the domestic
territory, which was an increase of 529,000 or 1.2% on a year
earlier," the release adds.

Consumer prices climbed 0.4% on both the month and the year in
July on an EU harmonised basis, the strongest reading since
January 2016.

Following numerous months of inflation around zero — sometimes
below zero — inflation in Europe has started to pick up a little
over the summer of 2016, and Germany's data on Friday is likely
to be used by the European Central Bank as evidence that its
monetary policy measures — namely unprecedented bond buying, and
negative interest rates — are doing their job and stimulating
price growth.

Germany's solid economic data is a good sign for the eurozone
that it has, as yet at least, been unaffected by the UK's vote to
leave the European Union. Prior to the vote, and in the immediate
aftermath, there were fears that any bad news from the UK could
drag down the rest of the continent. However, since the
referendum
data releases have shown little negative effect from the Brexit
vote on Europe as whole, and Friday's concrete data out of
Germany seems to confirm, that in the short term at least, Brexit
has had little impact on the continent.